PayPal Takes the Lead in ‘Anti-Bank’ Small Business Lending

Digital payment platform PayPal announced this week it had applied to Utah’s Department of Financial Institutions to establish a banking entity. It also filed documents with the U.S. Federal Deposit Insurance Corporation seeking coverage of its proposed PayPal Bank. The fintech firm — which also owns the popular Venmo app — made it clear that its main objective will be offering entrepreneurs credit opportunities they often fail to get from traditional banks.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” said PayPal CEO Alex Chris in a prepared statement. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunities across the U.S.”
PayPal said that it has already provided access to around $30 billion in loans and working capital to more than 420,000 businesses since 2013. But it said taking the step to operate a formal bank would create a faster and more efficient financing option for entrepreneurs, while assuming roles usually handled by third parties, adding to the company’s profit margin.
Meanwhile, just two days after PayPal revealed its banking plans, the artificial intelligence-driven lending platform Slope announced it will begin offering financing to eligible sellers on Amazon. The credit facility is being backed by banking giant JPMorgan Chase, and is intended to help small business vendors on the online marketplace “bridge inventory cycles, expand product lines, and reinvest in their businesses, without the friction or opacity of traditional lending.”
Slope said its artificial intelligence-native platform dramatically improves the vetting process of prospective borrowers, and speeds fund transfers to small business owners who qualify.
“We’ve built our platform to leverage real-time seller data and AI to provide fast, transparent financing decisions,” said Lawrence Lin Murata, co-founder and CEO of Slope. “This launch shows what’s possible when you use AI to actually understand a business in motion, unlocking faster, fairer credit for entrepreneurs selling on Amazon.”